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Table of contents
1. IPod Demand Lifts Apple Results; Profit Nearly Doubles As Gadget Retains Appeal Despite Arrival of
Zune.................................................................................................................................................................

Bibliography...................................................................................................................................................... 4

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Document 1 of 1

IPod Demand Lifts Apple Results; Profit Nearly Doubles As Gadget Retains Appeal Despite Arrival of
Zune
Author: Wingfield, Nick
ProQuest document link
Abstract (Abstract): Investors appeared to have wildly different interpretations of Apple's results, whipsawing its
shares in after-hours trading before finally sending them down 1.1% to $93.93; the shares were quoted at
$94.95, down $2.15, as of 4 p.m. in composite trading on the Nasdaq Stock Market. Some investors appeared
to home in on one potentially worrying aspect of Apple's Macintosh computer business: Apple said it sold 1.61
million Macs in the holiday quarter, unchanged from the previous quarter.
By other measures, Apple's Mac business continued to greatly outpace the growth of the PC market overall.
Apple sold 28% more Macs over the holidays than in the year-earlier quarter, compared with 5.7% growth in
world-wide PC shipments during the same time frame, according to IDC. The growth helped Apple eke out
small market-share gains: The company accounted for 4.7% in new PC shipments in the U.S. during the holiday
quarter, up from 3.6% a year earlier, IDC estimated.
Apple's iPod results were particularly striking for a quarter in which Apple faced a determined new competitor in
Microsoft Corp., which released its Zune digital music player. Despite broad distribution in retail stores, the Zune
player appeared to have little or no effect on iPod sales. Apple executives, citing retail research data, said their
share of new digital music player sales in the U.S. was 72% in December, roughly where it's been in the past.
Links: Linking Service
Full text: Record sales of the iPod catapulted Apple Inc.'s business to new heights over the holidays, helping its
profit surge in the company's fiscal first quarter.
The results from the Cupertino, Calif., electronics maker show that the public's love affair with Apple's portable
entertainment device -- its most closely scrutinized business -- continues. IPod sales helped lead to a 24% rise
in overall sales at Apple in the quarter.
Apple's ability to pump out a steady stream of innovations like new iPod models has been key to the company's
resurgence in recent years. Last week, Apple unveiled the iPhone, a cellphone that will become available in
June. The company said it hoped to sell 10 million iPhones by the end of 2008, which would account for roughly
1% of the global wireless handset market.
Apple said it sold more than 21 million iPods in the quarter ended Dec. 30, up 50% from the 14 million it sold a
year earlier. The company racked up $3.43 billion in sales from the device, accounting for nearly half of Apple's
total revenue. IPod sales in the quarter exceeded even the most bullish estimates of Wall Street analysts by
several million units.
"IPod demand this quarter was extraordinary," Peter Oppenheimer, Apple's chief financial officer, told analysts
in a conference call.
Investors appeared to have wildly different interpretations of Apple's results, whipsawing its shares in afterhours trading before finally sending them down 1.1% to $93.93; the shares were quoted at $94.95, down $2.15,
as of 4 p.m. in composite trading on the Nasdaq Stock Market. Some investors appeared to home in on one
potentially worrying aspect of Apple's Macintosh computer business: Apple said it sold 1.61 million Macs in the
holiday quarter, unchanged from the previous quarter.
But Gene Munster, an analyst at Piper Jaffray, said that was a reflection of seasonality and that Mac sales have
declined sequentially during the period in five out of the past six years. Mac sales are typically strong over the
summer during the back-to-school shopping season.
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By other measures, Apple's Mac business continued to greatly outpace the growth of the PC market overall.
Apple sold 28% more Macs over the holidays than in the year-earlier quarter, compared with 5.7% growth in
world-wide PC shipments during the same time frame, according to IDC. The growth helped Apple eke out
small market-share gains: The company accounted for 4.7% in new PC shipments in the U.S. during the holiday
quarter, up from 3.6% a year earlier, IDC estimated.
"It's hard to find stuff not to like here," said Jonathan Hoopes, an analyst at ThinkEquity Partners.
Apple's iPod results were particularly striking for a quarter in which Apple faced a determined new competitor in
Microsoft Corp., which released its Zune digital music player. Despite broad distribution in retail stores, the Zune
player appeared to have little or no effect on iPod sales. Apple executives, citing retail research data, said their
share of new digital music player sales in the U.S. was 72% in December, roughly where it's been in the past.
"The iPod was huge," said Jane Snorek, senior research analyst at FAF Advisors, an asset management firm in
Minneapolis that owns Apple shares.
Apple's results provided a strong counterpoint to a federal probe into improper stock-option-granting practices at
the company. Apple has turned over the results of an internal investigation into improperly dated stock options
at the company to the Justice Department and the Securities and Exchange Commission.
The company last month cleared Chief Executive Steve Jobs and other members of current management of any
misconduct, though it has disclosed Mr. Jobs recommended "favorable" dates for some options awards. In a
brief comment on the matter yesterday, Mr. Oppenheimer said Apple continues to cooperate with federal
investigators.
One of the biggest surprises in the quarter was the level of Apple's profitability. The company said its gross
profit margin for the quarter was 31.2%, up from 27.2% a year earlier. Apple executives said the increase was a
reflection in part of favorable pricing for key technical components that go into Apple products, such as LCD
screens and flash memory that stores songs and other data on iPods.
Apple had previously said it expected revenue of between $6 billion and $6.2 billion for the fiscal first quarter
and earnings of between 70 cents and 73 cents a share.
The company told investors to expect revenue of $4.8 billion to $4.9 billion for its fiscal second quarter, and
earnings per share between 54 cents and 56 cents.
Subject: Sales; Company reports; Financial performance;
Company / organization: Name: Apple Inc; NAICS: 334111, 511210, 334220;
Classification: 3100: Capital & debt management; 8651: Computer industry; 9190: United States
Publication title: Wall Street Journal, Eastern edition
Pages: A.2
Publication year: 2007
Publication date: Jan 18, 2007
column: The Economy
Publisher: Dow Jones & Company Inc
Place of publication: New York, N.Y.
Country of publication: United States
Publication subject: Business And Economics--Banking And Finance
ISSN: 00999660

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Source type: Newspapers

Language of publication: English
Document type: News
ProQuest document ID: 399008858
Document URL:
https://proxy.geneseo.edu/login?url=http://search.proquest.com/docview/399008858?accountid=11072
Copyright: (c) 2007 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further
reproduction or distribution is prohibited without permission.
Last updated: 2010-06-26
Database: ProQuest Health Management,ABI/INFORM Global

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Bibliography
Citation style: APA 6th - American Psychological Association, 6th Edition
Wingfield, N. (2007, Jan 18). IPod demand lifts apple results; profit nearly doubles as gadget retains appeal
despite arrival of zune. Wall Street Journal Retrieved from
http://search.proquest.com/docview/399008858?accountid=11072

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